UPDATE 1-UK's SFO expecting major developments in Libor probe

LONDON, Nov 9 (Reuters) - Britain’s Serious Fraud Office said on Friday it expected significant developments in its investigations into the rigging of Libor interest rates in the near future.

The government department said in July it could prosecute banks for rigging Libor and related interest rates but had yet to decide whether to bring charges.

Citing an unnamed source, news agency Bloomberg reported on Friday that British prosecutors were set to arrest former traders and rate setters at Barclays, Royal Bank of Scotland and UBS within a month.

The SFO said its investigation into the affair, in which banks allegedly manipulated the London Interbank Offered Rate, involved “a number of financial institutions”.

Barclays, RBS and UBS declined to comment.

The SFO declined to comment on the specific timeline of any arrests or on the identity of the institutions or individuals involved.

Arrests in the UK are made early in investigations, allowing people, who may not be charged, to be questioned under caution.

RBS said earlier this month it was likely be fined by British and U.S. authorities for its part in the scandal and wanted a settlement as soon as possible.

The bank has dismissed a number of employees for misconduct after its own investigations.

Barclays was fined 290 million pounds ($463 million) for manipulating Libor, one of a number of scandals which have rocked the industry. More than a dozen other banks are under investigation.

Reuters reported in July European regulators and U.S. prosecutors were close to arresting individual traders in connection with the affair.